Tax auditors are strictly required to base any tax corrections on sufficient and relevant competent evidence as mandated by the auditing standards in Article 29 of the KUP Law. In the PT SSM dispute, the Respondent issued a positive VAT base correction of IDR 20.2 billion using a proportional turnover ratio method triggered by discrepancies in the 2019 opening inventory.
The core conflict arose when the Respondent questioned the validity of the taxpayer's voluntary tax return amendment prior to the audit. The Respondent employed an indirect approach to calculate turnover, assuming that any increase in Cost of Goods Sold (COGS) must correlate with a specific sales ratio. Conversely, the Petitioner asserted that all sales transactions were supported by valid invoices and tax mandates, and inventory adjustments were made to reflect the actual physical stock conditions.
The Board of Judges, in its resolution, stated that the use of assumption-based methods or ratio approaches without being supported by real transactional evidence—such as concrete cash flow or goods flow—is unsustainable. The judges emphasized that Article 29 of the KUP Law requires audit results to be based on factual data rather than mere mathematical predictions of profit margins.
Analysis of this ruling demonstrates that the evidentiary strength of primary documents (invoices and bank statements) remains the taxpayer's primary defense. The implication is that the DGT cannot unilaterally determine tax liability based on financial ratio inconsistencies without proving the existence of unreported taxable deliveries.
In conclusion, PT SSM's appeal was fully granted as the Respondent failed to prove the existence of the corrected tax objects. This decision serves as a crucial reminder for tax authorities to adhere to the corridors of legality in material compliance testing.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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